Richard Stockton of Braemar Hotels & Resorts: Five Things You Need To Know To Succeed In The Real Estate Industry

An Interview With Jason Hartman

When you’re starting out and are new to a business or industry, always volunteer for more responsibility and more work. When things are asked of you, do what needs to be done, ask the questions that need to be asked, but ultimately don’t question the decisions made by those above you. That’s the way I approached my career early on. I was smart enough to know what I didn’t know. My job was to make the people above me believe that I was invaluable. If they felt I was helping them get their career forward, I thought it would ultimately help me move my career forward–and it did.

As a part of my series about the ‘Five Things You Need To Know To Succeed In The Real Estate Industry’, I had the pleasure of interviewing Richard Stockton.

Richard Stockton has served as Chief Executive Officer of Braemar Hotels & Resorts since November 2016, bringing a wealth of real estate experience and accomplishments to Braemar Hotels. Most recently, he served as Global Co-Head of Real Estate at CarVal Investors, a subsidiary of Cargill with approximately $1 billion in real estate investments in the US, Canada, United Kingdom and France. Stockton received a MBA in Finance and Real Estate from The Wharton School, University of Pennsylvania and a BS from Cornell University, School of Hotel Administration.

Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the Real Estate industry?

My interest in the real estate industry started in the hospitality sector when I was in high school while working as a cook in a restaurant and then starting my own catering business. From that experience, I became interested in hotels and applied to the Cornell School of Hotel Administration thinking that I wanted to be a general manager at a luxury resort so I could spend my day at the beach. This is the kind of thing you think when you’re 17.

I then attended Cornell with these aspirations, and while I was there, I took a variety of classes across different subjects. In addition to hotel management and food and beverage courses, I took classes in finance and real estate. I actually found that those subjects were most interesting to me, and I did pretty well in them, too.

One summer, I had an internship working in hotel management and I came away from that with probably less interest in working in management, feeling like so much of the work came during nights and weekends. It didn’t help that my brand new car got stolen at my place of work on the first week of the job. Overall, that ended up being a bad experience, but it helped turn me down the path of real estate finance. I sought another internship to do hotel valuations at a company called HVS, then ultimately started work full-time at Price Waterhouse in real estate consulting when I graduated.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?

There are a lot of stories that come to mind. I’ve had the opportunity to work for a number of different companies internationally, and one of the things that I recall is the time that I was invited to a special VIP dinner in Vietnam when we were trying to establish a partnership with a Vietnamese company. They wanted to impress me and decided to serve some of the local delicacies of Vietnam. So I’m sitting there, and they’re very excited about the next dish the waiter is bringing. The waiter comes out and sets in front of me a giant platter piled high with what looks like brown, squishy discs. It was a dish called Abalone, which is a type of giant sea snail. They were very excited to see so much Abalone in one place at the same time. Of course I tried it, but let’s just say I haven’t had it again since. It was a very interesting experience.

The takeaway here is the importance of understanding different people’s perspectives and different cultures. I have worked all over the world, so I have to be open to different cultures, try to integrate and form relationships with people who come from different backgrounds, and learn to appreciate the things that they appreciate. I think that was an important lesson for me.

Do you have a favorite “life lesson quote”? Can you share a story or example of how that was relevant to you in your life?

I think some words to live by come from the quote “don’t put off until tomorrow, what you can do today.” It’s all about not procrastinating. There are a number of ways this quote has come into play in my career. One example is a time that I was in Los Angeles. I had a friend that I used to know from my time in the UK that I had been meaning to get in touch with, but for whatever reason I hadn’t gotten around to it. I eventually did reach out, and it just so happened to coincide with the timing that his company was seeking a new global co-head of their real estate business at CarVal. He thought I’d be a great fit for the role and asked if I would be interested in doing it, and I ultimately decided to take the role. You don’t know what you’re missing out on if you’re not taking the initiative of going after what you want and taking action sooner rather than later. The timing in this instance happened to work out for me, but had I waited and put it off, I would have missed the opportunity.

Are you working on any exciting new projects now? How do you think that will help people?

I’ve recently joined the Board of Governors of Downtown Dallas Inc., which is the organization that runs the public improvement district for downtown Dallas. All major cities have something like this. In this case, Downtown Dallas Inc. is focused on improving the safety and cleanliness of downtown Dallas, which I think is a great initiative. I joined only a few weeks ago, and will be going to an orientation for the board position in a couple of weeks.

As work environments are changing and people are working remotely and spending less time in offices, there’s more vacancy of office space. You still have to maintain those spaces from a real estate and community perspective even though their uses may be changing. Some of the initiatives we have will focus on repurposing these vacant office spaces. I’m looking forward to moving those initiatives along and seeing what we can do to improve the downtown area.

What do you think makes your company stand out? Can you share a story?

Braemar Hotels & Resorts has the highest quality portfolio of luxury hotels in the lodging industry. That’s an objective measure based on the revenue per available room that we generate, and ours is significantly higher than any of our peers. Our portfolio consists of primarily luxury hotels, several of which are managed by major luxury hotel brands, including Ritz Carlton and Park Hyatt, as well as a number of independent hotels.

We recently acquired the most prestigious resort in the Caribbean, The Ritz-Carlton Reserve Dorado Beach in Puerto Rico, and we were able to do that by forming a relationship with the sellers. In this process, we learned they were looking for a long-term partner since they were still developing the land surrounding the hotel. We were able to acquire the property at a price that wasn’t necessarily the highest price they could achieve but structured a deal that was attractive to them by offering shares in our company. They saw what we were bringing to the table in terms of industry expertise and the quality of our portfolio, and they were enamored with the idea of being a shareholder in a great portfolio of assets. Quality begets quality, and our impressive portfolio has enabled us to acquire an even higher level of quality in the Ritz-Carlton Reserve, which is by far the nicest hotel that we own.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Probably the most influential person from my career is my professor of real estate at Wharton, Peter Linneman. He’s very well known in the real estate industry and he’s been a mentor, teacher, and a friend for the better part of 25 years. He taught me an important lesson that has really stuck with me throughout my career.

When I was a student, there was a group assignment in one of his classes where we had to do a presentation on Chinese real estate investment opportunities. My group had saved the PowerPoint presentation on a thumb drive. When it was our turn to present, we walked to the front, plugged in the USB drive, and tried to open the presentation. Unfortunately, it was the wrong version and it wouldn’t open.

We had to think fast in order to combat the situation and I quickly started to deliver the presentation without any of the visual aids or prompts, and walked the class through the presentation from memory. Afterwards, Professor Linneman was very impressed and gave our group an A, particularly because we didn’t rely on the material on the slides and proceeded anyway despite an unfortunate issue. After that project, he brought me on as a teaching assistant for his international real estate class. That class started my interest in international real estate, which I’ve followed through with in my career. I worked in Europe and Asia for 15 years, and it was my experience with Peter that really encouraged me to pursue my newfound interest in international real estate, which was responsible for my career path.

Ok. Thank you for all that. Let’s now jump to the main core of our interview. Can you share 3 things that most excite you about the Real Estate industry? If you can please share a story or example.

First, the industry is very entrepreneurial. Whether its developers/brokers or people on the finance side of things, there are many self-starters and an abundance of that entrepreneurial spirit. The opportunities that exist for entrepreneurs is something I really enjoy about the industry.

Second, there’s also a fair amount of problem solving and quantitative analysis. You can boil everything down into a financial model that is tangible. There’s always an answer. We look at acquisition opportunities all the time and when looking at these opportunities a seller has a price in mind and we have to build our own model to see what we think is an appropriate price for that asset. Sometimes the number comes in very close to what they’re asking and sometimes the number is very far off. It’s a kind of mystery to see where we come out every time, and it’s an exciting part of the process. Only once every 20 or 30 times our number matches up with what they’re asking, and that’s when we do a deal.

The third thing about real estate, what they call the built environment, is very integrated into public policy and community development. It forms the basis upon which we operate our lives. That’s something that’s not only exciting but essential to life. Real estate is so vital to how we live, how we have fun, and how we work. It’s integral infrastructure, and it’s exciting to be a part of building, buying or fixing that for people.

Can you share 3 things that most concern you about the industry? If you had the ability to implement 3 ways to reform or improve the industry, what would you suggest? Please share stories or examples if possible.

One thing that concerns me that varies by geographic location is the occurrence of corruption. Real estate is highly regulated and relies on public figures or people that work for public bodies. In some cases, those figures are not very well compensated but still make very important decisions on things such as building permits. You end up with a combination of a lot of red tape and people in a position of authority that can be swayed by money. It’s much less of a problem in the United States than it is in other places, but having worked all over the world, I’ve seen that it can be a serious problem. We have to figure out how to improve this corruption. I certainly think that streamlining the number of permits you need in real estate, which is generally construction related, is one way to improve. The more levels of permits and approvals you need, the more opportunities there are for corruption in certain jurisdictions.

The second thing that concerns me about the industry right now are the trends around remote working and e-commerce. The usage of real estate is changing. This creates what we call in the industry functional obsolescence, which means you have office space that goes vacant because there is no longer a need for physical office space, or retail malls that go vacant because stores close from the shift to online shopping, and so on. This functional obsolescence is a problem, and at the same time an opportunity. For example, we’ve seen Amazon lease these vacant spaces for distribution centers, or in the case of downtown office space, we recently had a vacant building, now called the National building, that converted from offices to multi-family and hotel space, which has been very successful. Getting involved in these conversions is something I’m very personally interested in to help ensure we don’t have vacant buildings. Vacant or derelict space can attract crime and is generally not good for the wellbeing of communities.

The third concern of mine and something that I’m personally invested in is human trafficking. The hotel industry in particular has a problem with trafficking. I’m invested in a company called React Mobile which provides panic buttons to employees in hotels all across the country. It’s an initiative endorsed by a group that I’m on the board of called the American Hotel and Lodging Association. Panic buttons are an important way to protect and keep hotel workers safe. It’s something I feel passionate about and have therefore invested in the business in order to hopefully improve the safety of hotel workers everywhere.

What advice would you give to other real estate leaders to help their teams to thrive and to create a really fantastic work culture?

The first thing I’d say is to actively encourage participation, push people to speak up, and solicit everyone’s views. By doing this you will get different perspectives, particularly from younger people who may not weigh in otherwise. Having everyone participate in decision-making helps you see the entire picture or think about things differently.

Another thing that our company likes to do is to organize off-site events to create a positive culture. It’s certainly more difficult for businesses that are working primarily remotely, but I would encourage those businesses to get together in the same place at least a couple of times a year. Nothing really beats face-to-face interaction.

I also think that with the shift to remote work, going forward all companies need to have more flexibility in their schedules, allowing employees to work more from home and have hybrid work schedules. It’s been proven that people can be just as productive working from home, so you don’t necessarily need to be in the office all the time. Maybe the days of the five-day workweek are gone, and the sooner leaders adapt to that the better off they’ll be. I would encourage them to allow flexibility for people.

Ok, here is the main question of our interview. You are a “Real Estate Insider”. If you had to advise someone about 5 non intuitive things one should know to succeed in the Real Estate industry, what would you say? Can you please give a story or an example for each?

First, when you’re starting out and are new to a business or industry, always volunteer for more responsibility and more work. When things are asked of you, do what needs to be done, ask the questions that need to be asked, but ultimately don’t question the decisions made by those above you. That’s the way I approached my career early on. I was smart enough to know what I didn’t know. My job was to make the people above me believe that I was invaluable. If they felt I was helping them get their career forward, I thought it would ultimately help me move my career forward–and it did.

Secondly, focus on building both internal and external relationships. I developed quite a large network over the years that spans the globe. I think that the network I have built has been very useful to me as I’ve moved from one position to another, formed partnerships, and sourced opportunities. Focusing on those relationships and never burning any bridges are key in both business and life.

Third, I think it’s also important to build an external profile in the industry, whether that’s speaking on panels, otherwise participating in conferences, or getting into positions of leadership and influence in trade organizations. Putting yourself out there and sharing your expertise is important to your ultimate success in the industry.

My fourth piece of advice is to be persistent. If you have an objective you’re trying to achieve, whether it’s setting up a meeting or acquiring an asset, just be persistent and go for it. It’s not necessarily that someone else doesn’t have time for you, maybe they just don’t have time in general. By staying in front of them, you can work to figure out what they want until they explicitly say they aren’t interested anymore.

And then lastly, be very open to travel and relocation. Travel for business is essential. There should be no question if you’re asked or required to travel, you just do it. I’ve even taken it to the next step in my own career and have lived all over the world. I’ve said yes when being asked to move overseas, and I think that’s ultimately benefited me in terms of being much more well-rounded both intellectually and socially. Traveling and relocating gives you more opportunities and helps you build a strong network of relationships that can help you in the future.

Because of your position, you are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)

Some of my favorite hobbies are outdoor activities, namely scuba diving and fishing. Something I’ve read a lot about is the preponderance of plastics and pollution in the ocean. This is a problem that seems to be created by everyone, from every country and nation. However, it’s not a problem we’re taking collective responsibility for.

There are a number of movements out there that are privately funded initiatives focused on cleaning up the ocean and funding technologies that can help with the initiative. What I think we’re missing though is a much broader, international coalition of the largest countries in the world to really back a means of doing this. We saw various countries coming together to build the International Space Station and put billions of dollars towards accomplishing that shared goal. Pollution in our ocean is an important initiative that we should get in front of and do something similar amongst the largest countries in the world.

How can our readers further follow your work online?

LinkedIn is the main way that I reach people, and I post there frequently, so that’s the best place to follow me.

Thank you for your time, and your excellent insights! We wish you continued success.